The loonie (FXC-0.8%) slips about 45 pips after the Bank of Canada leaves its benchmark rate unchanged at 1%, but is decidedly dovish in its accompanying statement (though this was somewhat expected).

The global economy's "near-term dynamic has changed and the composition of growth is now slightly less favorable for Canada ... Uncertain global and domestic economic conditions are delaying the pick-up in exports and business investment, leaving the level of economic activity lower than the Bank had been expecting."

"The fact that inflation has been persistently below target means that downside risks to inflation assume increasing importance."

Canada expects duty-free access of its seafood, lumber, manufacturing, beef, pork, wheat and mineral sectors to the EU would generate ~$12B in the Canadian economy; Europe would face eliminated tariffs on exports including clothing, cheese, wine, dairy products and more.

While many major Canadian companies and exporters lobbied hard for the pact, others such as dairy producers in Quebec and Ontario are opposed.

Canadian GDP growth of 0.6% in July surpasses expectations of 0.5% and is the strongest print since July 2011. Before getting too excited, it's worth remembering GDP slid 0.5% in June - the biggest decline since the 2009 recession.

On a year-over-year basis, GDP rose 1.4% in July, up from 1.1% in June.

The headline is good for a 20 pip pop in the loonie (FXC), now +0.15% and buying $0.9720.

Canada added 59K jobs in August, nearly tripling expectations of 20K. The unemployment rate fell to 7.1% from 7.2%. Over the last 6 months, employment gains have average 12K/month vs. 29K/month in the preceding six month period.

Screening for income ETPs to 1) Hold up against a rising yield curve 2) Offer dividend income 3) Exhibit low volatility, Ned Davis' Neil Leeson pulls up several MLP funds, a few international stock ETFs, and a private-equity tracker.

The international funds include Canada (EWC), U.K. (EWU), and the iShares Global Energy ETF (IXC).

The quick take is these exchange one set of risks for another, writes Brendan Conway - unlike bonds, each of these funds got crushed (or would have been crushed if it existed) during the financial crisis.

Potash production in Canada accounts for 0.5% of GDP and ~1.5% of Canadian exports; a drop of 25% in volumes this quarter - not unreasonable, as buyers wait and see how low prices go - would mean a 0.4% annualized drop in Q3 GDP. (EWC-1.2%)

Potash (POT-16.6%) shares already were facing pressure from weakening prices, leading it to cut its earnings outlook just last week.

The Bank of Canada maintains its benchmark lending rate at 1% following the first policy meeting headed by new Governor Stephen Poloz. The statement leans dovish, noting inflation has been low and is "expected to remain subdued." The loonie (FXC-0.5%) takes a sizable dip, now buying $0.9615. Canadian stocks (EWC+0.3%) gain in early trade. Poloz's press conference is set for 11:15 ET.

The jobs action is in Canada where May payrolls jumped 95K, the best month of job creation in a decade and flying past expectations for 15K. The unemployment rate fell to 7.1% from 7.2%. The loonie (FXC) jumps 0.6% to $0.9798. We'll keep an eye on stocks in Toronto (EWC) as Canadian equities have been underperformers this year thanks to weakness in commodity prices.

Canada's RBC PMI for May jumps to 53.2 - it's strongest pace in 11 months, and up from 50.1 in April. New Order growth hit an 11-month high, Output moved into expansion territory for the first time in 3 months, Job Creation is at its strongest since August, and Backlogs went into expansion for the first time in 8 months. The loonie (FXC) is flat and buying $0.9647. Stocks: EWC+0.6%, but it's been an underperformed this year, off 1.8% as resource prices and the loonie slide.

The recent selloff in commodities (DBC) is not a correction, says Stan Druckenmiller, now on stage at Ira Sohn, but instead the end of the supercycle. Avoid commodity markets - Brazil (EWZ, BRF, BRL), South Africa (EZA, SZR), Canada (EWC, FXC). "Frankly, I'd short the aussie (FXA)." His largest equity holding? "I can't imagine a better position than Google (GOOG)" - selling for 16x earnings and no exposure to China.

Cautious on Canadian stocks of late, Desjardins Capital's Ed Sollbach is taking advantage of the TSX's 7.3% decline over the last 6 weeks to put money to work, particularly in the materials and energy sectors hard-hit be the big decline in commodity prices. EWC has underperformed the S&P 500 by nearly 1,700 bps YTD.

The iShares MSCI Canada Index Fund seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of publicly traded securities in the Canadian market, as measured by the MSCI Canada Index.
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